Swedish digital healthcare startup Kry says that doubling down on its investment into generative AI is set to delay profitability at the company.
The unicorn is profitable on a country level — which does not take into account centralised company costs like developing tech on its digital platform — in all its markets, but had initially set its sights on getting out of the red across the business by the end of 2024.
That will likely now come in 2025, says chief operating officer Kalle Conneryd Lundgren, talking to Sifted ahead of the release of Kry’s latest annual report, covering 2023.
Pre-tax losses for 2023 fell to €78m — roughly half of the €155m they were in 2022 — after savings from the company’s “major restructuring”. Revenue rose slightly from €168m to €188m.
The company also raised a €20m convertible note from existing investors in March this year — with the biggest ticket coming from the Healthcare of Ontario Pension Plan.
“We have a runway that allows us to do investments related to growth,” says Conneryd Lundgren. “Investment into AI is pulling us apart from other care providers — and it would be foolish not to take that opportunity.”
GenAI investment
He tells Sifted that this investment has been one of Kry’s biggest overheads over the past 12 months and that the company would be fully profitable now if it wasn’t pumping cash into that area.
The work is planned to result in a big product release sometime in the second half of this year and, while Conneryd Lundgren is tight-lipped about what exactly this GenAI-based product will do, he says it will help solve two key problem areas.
One is the time its healthcare staff spend on admin — and the product will feature a number of tools to reduce that, on top of those the company already deploys.
Kry will also release AI tools to “sew together” often complex and confusing digital and physical care pathways, says Conneryd Lundgren: “In healthcare systems today, if you have physical interaction somewhere and a digital interaction somewhere else, there is no transfer of information between them.”
A number of other European startups are also working on GenAI tools for healthcare — and they’ve picked up some sizable rounds from VCs.
French startup Nabla secured a $24m Series B round earlier this year to expand its automated note-taking tool for medical professionals. Corti, a Danish AI note-taking and advisory platform for doctors, raised a $60m Series B in September 2023.
While Conneryd Lundgren didn’t rule out working with startups providing GenAI tools in the future, he says Kry’s are “far better” than others on the market.
That, he argues, is largely due to Kry having built its own to fit directly into its tech platform.
“AI is off the shelf nowadays and the challenge is to implement it into your own platform,” he tells Sifted. “[Our care platform] is already hooked up to reimbursement and electronic medical record systems across Europe, so it’s almost plug and play.”
A team of around 100 developers have been working on this project — which will run on OpenAI’s GPT models.
Becoming the “next Ikea”
It’s all part of Kry’s plan to become Europe’s biggest primary care provider (excluding public healthcare systems) — a target Conneryd Lundgren says the company hopes to hit in years, as opposed to decades.
The company says that 25% of Swedish households have at least one member who has downloaded the Kry app — and by 2027 it wants to provide care for 10% of the population in all of its markets.
“Kry may be the next Ikea,” says Conneryd Lundgren — pointing to the Swedish furniture seller expanding all over Europe and providing a product for less money. “The only difference is they do furniture, we do healthcare.”
In the meantime, the company has one eye on the M&A market. 30 companies make up the Kry “group” — and around 20 of those have been acquisitions. While the company didn’t acquire any new companies in 2023 — it’s open to snapping up legacy healthcare providers with a physical presence as it looks to bolster its in-person healthcare offering.
“We believe the time when you spoke about digital and physical care as separate things is over,” he says. “That makes no sense any more — every patient has physical and digital interactions in their care journey.”
Kry currently operates 55 physical clinics across France, Norway and Sweden — with the vast majority in the latter. Conneryd Lundgren won’t put a date of when he expects the company to open its first in the UK, but adds it’s “not impossible” that’ll happen in the next 12 months.
Falling losses
Kry is one of the first-generation digital health companies that emerged in Europe in the 2010s. Since launching in 2015 the company has raised more than $700m — including a $160m Series D extension in July 2022 and an unannounced €30m in 2023.
After a boom in customer numbers during the pandemic, in 2022 the company laid off hundreds of employees, withdrew from Germany and halted a planned expansion into Italy.
Last year, Conneryd Lundgren told Sifted that losses in 2022 rose due to “goodwill payments” to laid-off employees, but now says they are falling due to improved operational efficiency brought about by “better systems and operational models”. Kry has, for example, already deployed AI tools in all of its markets that have cut doctor’s admin time by 30%, he says.
Kry also laid off a further 29 non-clinical staff in 2023. While Conneryd Lundgren tells Sifted that the company will not be undergoing anymore “major restructuring”, the company may “reduce” the number of administrative staff further as tech makes operations more efficient.
Revenue in all of its markets — except for Norway — rose. France saw the most growth, with the market making €26m — a 56% increase on the amount the previous year. Sweden remained Kry’s biggest market — with revenue growing 5% to €134m, and in the UK it rose from €21m to €25m. In Norway it fell by just over a quarter to €2.8m.
Read the orginal article: https://sifted.eu/articles/digital-health-unicorn-kry-gen-ai-news/
